Business Ethic Chapter 5-8

Limited Organizational involvement

(Indirect and impersonal), contribution to PAC, support of a trade association.

Aggressive organizational involvement

(direct and personal) executive participation, involvement with industry working groups, public policy development

moderate organizational involvement

(indirect yet personal) organizational lobbyist, employee grassroots involvement, stockholders and customer encouraged to become involved

The 4 methods of ethical reasoning

-Virtues -Utilitarian -Rights -Justice

Uses of Ethics reporting mechanism

1. provide interpretations of proper ethical behavior involving conflicts of interest 2. create an avenue to make known to the proper authorities 3. Give employees and other corporate stakeholders a way to discover general info about a wide range of work-related topics

Corporate Culture

A blend of ideas, customs, traditional practices, company values, and shared meanings that help define normal behavior for everyone who works in a company.

AMA (American marketing association)

A code of ethics for its members. It advocates professional conduct guided by ethics.

common law

A legal system based on custom and court rulings. ( past decisions from the courts)

Ethical Egoist

A manager or employee who puts his or her own self-interest above all other considerations

Why business should be involved in politics

A pluralistic system invites many participants Economic stakes are high for firms Business counterbalances other social interests Business is a vital stakeholder of government

Bundling

A tactic in which PACs collect contributions from like-minded individuals (each limited to $2000) and present them to a candidate or political party as a "bundle," thus increasing the PAC's influence. This clearly indicates that the contributions are from the firms shareholders.

Tax exempt organizations

A third mechanism businesses can use to direct money to election campaigns. They are political campaign groups officially unaffiliated with individual parties or candidates and therefore aren't liable for campaign spending restrictions.

Direct contributions by corporations

After the citizens united decision in 2010, corporations and labor unions are allowed to directly contribute to candidates for public office.

Social regulations

Aimed at such important social goals as protecting consumers and the environment and providing workers with safe and healthy working conditions

The two main antitrust enforcement agencies

Antitrust Division of the U.S. Department of Justice Federal and the federal trade commission. Both can bring suits against companies.

Super PACs

Because contribution limits had been removed by the court, theses organizations were able to raise and spend vast amounts of money, along as they were not actually affiliated with any campaigns.

economic sanctions

Boycotts, embargoes, and other economic measures that one country uses to pressure another country into changing its policies.

Expert Witness Testimony

Businesses provide facts, anecdotes, or data to educate or influence government leaders at public forums like congressional hearings. Such as CEOs or other executives to give testimony.

Executive and employee personal contributions

Companies can influence elections by encouraging their executives or employees to make personal contributions to campaigns

Cross-cultural contradictions ethical problems

Companies interest versus diverse cultural traditions and values. Ethnocentric mentality. ex. "Foreigners have a funny notion of whats right and wrong"

Utililarianism method

Comparing benefits and costs. An action is ethical when net benefits exceed net costs. The drawback is the difficulty of accurately measuring both costs and benefits.

Justice method of ethical reasoning

Distributing fair shares and benefits and costs are fairly distributed. However, it is difficult to measure benefits and costs. Basically is it fair?

What are the 3 ethical criterias

Egoism, benevolence, and Principle

Lobbying

Engaging in activities aimed at influencing public officials, especially legislators, and the policies they enact.

Competitive Pressures on profits ethical problems

Firms interest versus others interest and have a bottom line mentality. They do this to protect their profits

The business roundtable

Founded in 1972, an organization of chief executive officers from leading corporations involved in various public issues and legislation

Principle (integrity approach)

Goes by company rules and procedures and worries about laws and professional codes.

3 different political strategies

Information, financial-incentives, constituency-buidling.

Ethical challenges with info technology

Involve invasions of privacy. the collection and storage of and access to personal and business info.

The 3 levels of political involvement for companies

Limited organizational involvement, moderate organizational involvement, and limited organizational involvement.

Factors that contribute to moral intensity of an issue

Magnitude of consequences The issues of proximity Social consensus Probability that it will lead to consequences How quickly consequences will occur

Why business should NOT be involved in politics

Managers aren't qualified to engage in political debate. Business is too big, powerful Business is too selfish to care about common good Business risks its credibility by engaging in partisan politics

Grassroots Strategy

Objective is to shape policy by mobilizing the broad public in support of a business organization's position. Its objective is to influence local opinion leaders.

Economic leverage

Occurs when a business uses its economic power to threaten to leave a city, state, or country unless a desired political action is taken

Bipartisan Campaign Reform Act

Passed in 2002, this act amended the Federal Election Campaign Act of 1971 with several provisions designed to END the use of nonfederal, or "soft money" (money raised outside the limits and prohibitions of federal campaign finance law) for activity affecting federal elections.

Why do ethical problems occur in business?

Personal gain and self interest Competitive pressures on profits Conflicts of interest Cross-cultrual contradictions

Virtue Ethics method

Perspective that what is moral comes from what a mature person with "good" moral character would deem right

Monetary policy

Policies that affect the supply, demand, and value of a nations currency.

Anti trust laws

Prohibit monopolies & contracts, combinations & conspiracies that unreasonably restrain trade.

U.S. Foreign Corrupt Practices Act (FCPA)

Prohibits American companies from making illicit payments to foreign officials in order to obtain or keep business

Rights method of ethical reasoning

Respects entitlements, basic human rights are respected however, it is difficult to balance conflicting rights.

Negative externalitites

Result when manufacture or distribution of a product gives rise to unplanned or unintended costs borne by workers, consumers, or other business stakeholders. EX. Pollution

Regulations

Rules of conduct for citizens and organizations. It is a primary way of accomplishing public policy.

Corporate political strategy

The activités taken by organizations to acquire, develop, and use power to obtain an advantage. These strategies are used to further a firms economic survival or growth

Honest Ads Act

The goal was to provide more transparency for online political advertisements. Corporate executives supported this.

Market failure

The market[lace fails to adjust prices for the true costs of a firms behavior.

Trade policy

The rules that govern imports from and exports to foreign countries. Another type of economic policy

How does spirituality effect the business place

There is a positive relationship between an organizations economic performance and attention to spiritual values.

Conflicts of interest ethical problems

This may happen if they have multiple obligations or loyalties. They have a favoritism mentality.

Why should business be ethical?

To enhance business performance To comply with legal requirements To prevent or minimize harm To meet demands of business stakeholders To promote personal morality

Soft Money

Unlimited amounts of money that political parties previously could raise for party-building purposes. Now largely illegal except for limited contributions to state and local parties for voter registration and get-out-the-vote efforts.

Financial-incentives strategy

Where businesses provide incentives to influence Gove policymakers to act in a certain way. Ex. Political contributions, economic leverage, political consulting aid, office personnel

Constitutency-building Strategy

Where businesses seek to gain support from other affected organizations to better influence gov policymakers to act in a way that helps them. Ex. Stakeholder coalitions, advocacy advertising, public relations, legal challenges.

Information strategy

Where businesses seek to provide gov policymakers with info to influence their actions. Ex. Lobbying, direct communication, expert witness testimony

Personal Gain and selfish interest ethical problems

Worried about selfish interest versus others and have. Have a egotistical mentality.

Trade associations

a coalition of companies in the same or related industries seeking to coordinate their economic or political power to further their agenda

Advocacy advertising

a form of advertising in which an organization expresses its views on controversial issues or responds to media attacks

Dodd-Frank Act

a law enacted in the aftermath of the financial crisis of 2008-2009 that strengthened government oversight of financial markets and placed limitations on risky financial strategies such as heavy reliance on leverage

Moral intensity

a person's perception of social pressure and the harm the decision will have on others.

Bribery

a questionable or unjust payment often to a government official to ensure or facilitate a business transaction

Cost-benefit analysis

a study that compares the costs and benefits to society of providing a public good

economic regulations

aim to modify the normal operation of the free market and the forces of supply and demand. An example is the regulation against monopolies

Lobbyist

companies hire full-time reps in DC, state capitals, or local cities to keep abreast of developments that may affect the company.

Integrity-based ethics programs

company mechanisms designed to instill in people a personal responsibility for ethical behavior. It increases employees sense of integrity, commitment to the organization, and their perception that better decisions were made.

Compliance-based ethics programs

company mechanisms typically designed by corporate counsel to prevent, detect, and punish legal violations. It increases employees willingness to seek ethical advice and sharpen their awareness of ethical issues at work

Benevolence (concern for others approach)

desire to do good to others, the company would worry about team interest and social responsibliity

Types of regulations

economic and social

Sarbanes-Oxley Act of 2002

established requirements for proper financial record keeping for public companies and penalties of as much as 25 years in prison for noncompliance

Ethical Relativism

ethical principles should be defined by various periods of time in history, a society's traditions, the special circumstances of the moment, or personal opinion.

Public policy inputs

external pressures that shape a government's policy decisions and strategies to address problems

Public policy tools

incentives and penalties that government uses to achieve policy goals

Political Action Committee (PAC)

independently incorporated organizations that can solicit contributions and then channel those funds to candidates seeking public office.

Most common unethical practice at work

lying to employees and external stakeholders, abusive behavior, internet abuse, and conflicts of interest and health violations

Public affairs department

manage the firm's interactions with governments at all levels and to promote the firm's interests in the political process

Dark Money

political money where the donors of the money do not have to be disclosed.

Employee ethics training

programs developed by businesses to further reinforce their ethical expectations for their employees. generally most expensive and time consuming element of an ethics program

U.S. Corporate Sentencing Guidelines

provide a strong incentive for businesses to promote ethics at work.

Taxation policy

raising or lowering taxes on business or individuals

Ethical climate

represents an unspoken understanding among employees of what is and is not acceptable behavior based on the expected standards or norms used for ethical decision making

Public policy

the course of action the government takes in response to an issue or problem affecting a substantial segment of the citizens

Reregulation

the increase or expansion of government regulation, especially in areas where the regulatory activities had previously been reduced.

Fiscal policy

the patterns of government collecting and spending funds that are intended to stimulate or support the economy. This public policy directly concerns the economy

Predatory pricing

the practice of selling below cost to drive rivals out of business.

Deregulation

the removal or scaling down of regulatory authority and regulatory activities of government

industrial policy

the strategies by which a government works actively with industries to promote their growth and tailor trade policy to their needs

Egoism (self-centered approach)

the tendency to see things in relation to oneself; self-centeredness. The company would worry about their interest and economic efficiency. More likely worried about profit